There's nothing all that new about Amazon.com's (NASDAQ:AMZN) Prime service. Most people know by now that the company offers free two-day shipping on millions of items and that the service includes free video-streaming content, music, and access to special deals.
But a little over a year ago, Amazon introduced an expansion of Prime called Prime Now, which gives members in select markets free two-hour delivery on more than 10,000 items, as well as one-hour delivery for around $8. Prime Now is expanding quickly and is already in 24 markets across the U.S.
Cowen & Co. analyst John Blackledge recently conducted a survey of 1,250 Prime Now users and found out some interesting facts you probably didn't know. Let's take a look.
- Prime Now is popular among Prime members. Already, 25% of Prime subscribers bought items through Prime Now back in January. That's one-quarter of Prime users tapping into the new service shortly after a year since it launched and with availability in limited markets.
- You should tip the delivery drivers. It seems a bit counterintuitive to tip for things you buy on Amazon, but Prime Now is a little different. Sure, it's delivery service that's technically built into the price of the $99 Prime membership. But Amazon treats the service just like any other timely deliveries you receive at your home. The Prime Now app easily allows users to decide how much tip they should leave.
- The age of Prime Now users trends younger. People aged 25 to 44 make up two-thirds of all Prime Now users. That's roughly the same percentage of regular Prime users by age group.
- For those that use Prime Now, they use it a lot. 70% of respondents bought items on Prime Now several times per month, and 24% purchased at least one item each week.
- Grocery items are a big hit. About 36% of Prime Now goods are purchased from local grocery stores. That's great for local stores right now, which could see sales of items increase as they put more items in the Prime Now service.
- But local grocery stores need to watch out, too. Blackledge believes Amazon is the ultimate winner here. He said that Prime Now is "one of the pathways" the company is taking to gain marketshare in the $1 trillion grocery market.
- Of course, it's not just grocery sales that are driving Prime Now sales. Media purchases top the list, as do electronics. Users typically bought from four different categories, which include media, electronics, household products, apparel, personal care, toys, and groceries.
Amazon Prime has at least 46 million members right now, and subscribers have grown by more than 50% for each of the past two years. Not all of those can tap into Prime Now, of course, but it's very likely that Amazon intends on bringing Now to a larger portion of its membership once it proves it's a viable service.
Prime users spend about $500 more on Amazon's site then non-members do each year. And it's likely the company is banking on those members spending even more when they finally get the chance to have items delivered within an hour or two.
Chris Neiger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.